A G Barr Plc - Overview of Operations - Essay Example

? Business finance and legal service work (writing a report) Contents Contents 2 Overview of Operations: A G Barr Plc 3 The Industry 4 Strategyand Assessment 4 SWOT analysis 4 Balanced scorecard analysis 5 Management Team 6 Summary 7 Reference 8 Overview of Operations: A G Barr Plc A G Barr is soft drinks manufacturing company based out of UK. The company’s operations range from manufacturing, marketing and selling of soft drinks in the markets of UK since 1875. The company has launched various brands of soft drinks in the UK market that is aimed to satisfy the changing needs of their customers. One of the eminent brands of the company is IRN-BRU which the company wished to develop for more than 100 years. The other well known brands in soft drinks launched by the company include Red Kola, Tizer, Simply juice drinks, KA, DNB, Rubycon, Strathmore etc (A.G.Barr Plc, 2013, p.1). A G Barr is a franchisee partner of Schweppes International Ltd. where the company is involved in a partnership of production and sale of soft drinks. Rockstar Inc. of USA is another partner of A G Barr. The Rockstar drinks are sold in the UK market through distribution channels of A G Barr. The volume of sales of soft drinks as well as revenues from the sales of its brands has increased over the years. The company sells twelve cans of 330 ml capacity of IRN-BRU per second in the Scottish markets. For its operations, A G Barr has invested over ?50 million for the production and distribution of soft drinks in Cumbernauld. The company produced over 180 million litres of soft drinks in this site. This operation unit of A G Barr is able to manufacture 690 million cans per year. The Industry The company under consideration operates in the soft drinks market of UK. The soft drinks industry can be categorised into three segments. The three segments are take-home segments, the impulse segment and the premise segment. The take-home segment distributes soft drinks through the retail groceries, the impulse segment is the outlet shops in order to satisfy impulsive demands, the premise segment comprises the clubs, hotels, restaurants, etc. The soft drinks industry is governed by the British Soft Drinks Association which protects the interests of the soft drinks manufacturer and distributors by communicating with the government and the media and also promoting a competitive and sustainable environment for the soft drinks industry. The various categories of soft drinks are carbonated soft drinks, still and juice drinks, sports drinks, energy drinks, water, etc. The competitors of A G Barr in the soft drinks industry include Pepsi Co. Inc, Coca Cola Company, etc. Strategy and Assessment The assessment and strategies of A G Barr is based upon the two forms of analysis, namely the SWOT Analysis and the Balance Score Card Analysis. The SWOT analysis highlights the strength, weakness, opportunities and threats of A G Barr. The balanced scorecard analysis categorises the operational targets of the company from the perspective of financial growth, customer growth, quality of products and services and determine actual values to compare with the set targets. SWOT analysis The SWOT analysis for A G Barr has been given below in the form of a chart.   Internal External Positive Strength Opportunities 1. The IRN BRU brand of soft drinks has been voted as the best brand of A G Barr and also holds a Guinness record for the largest can of soft drinks. 1. The suppliers of A G Barr have lesser bargaining power due to the availability of substitute product for sugar and substitute for packaging. 2. The company has a large market share and the operations are diversified with the help of several brands in different markets. 2. A G Barr can leverage on its strong brand to expand its operations in the emerging markets of the world like Latin America, Asia, etc. Negative Weaknesses Threats 1. The buyers of the soft drinks of A G Barr have a higher bargaining power due to the availability of several brands of soft drinks in the market. 1. There exists a fierce competition among the soft drinks manufacturers in the UK market. A G Barr has to bear the threat of its competitors like Pepsi, Coca Cola, etc. 3. The behavior of the consumers of soft drinks of A G Barr is highly volatile on the basis of market information on its products. This could lead to fluctuation of sales of the company. 3. The consumption of soft drinks takes into account the health considerations, like diabetes, obesity, etc. that could be a potential threat to its customer base. Balanced scorecard analysis The balanced scorecard analysis for A G Barr has been presented below. The actual performance of the company is divided by the target value to find the relative performance in the different parameters. The relative performance is multiplied by the assigned weight-age to find the absolute performance. The total absolute performance according to the balanced scorecard analysis is 75% of the target value. Perspective Objective Metric Target Value Actual value Relative performance Weightage Absolute Performance Financial Growth of revenue Annual Rate of Growth 20% 18.25% 0.91 0.2 0.18               Growth in operating profits % EBIT/Sales 30% 26% 0.87 0.2 0.17               Solvency Current Ratio 2.5 1.3 0.52 0.15 0.08 Customer Increase in Customer base Annual rate 10% 7% 0.70 0.2 0.14               Customer complaints Customer complaints per 1 lac Customer Survey 10% 5% 0.50 0.05 0.03 Internal Development of soft drinks quality % R&D Expense to Revenue 5% 4% 0.80 0.05 0.04               UK Market Share Market Capitalization ?800m ?588m 0.74 0.15 0.11             Total 0.75 Management Team A G Barr is headed by an efficient board of directors who have a wide range of experience in the industry. The company is chaired by Ronald G Hanna since 2009. The other key positions of the management are the positions of managing director, finance director, environmental committee chief, commercial director and non-executive directors. Former representatives of the British soft drinks association hold positions of non-executive director of the company. A total of eight key members holding the above mentioned positions are present in the managing committee of A G Barr who are responsible for taking management decisions. Summary A G Barr is a key player in the soft drinks market of UK. The company entered into partnership with foreign players in the industry and sells soft drinks under a wide range of brands in the UK market. The spread of its brand names and its long experience in the industry are its areas of strength. The company is, however, vulnerable to the volatile consumer behaviour and relative low brand loyalty of the industry. The company is headed by an able management team that have seen the company achieve an absolute performance of 75% of the set target. Reference A.G.Barr Plc. 2013. About Us. [Online]. Available at: http://www.agbarr.co.uk/ces_general.nsf/wpg/about_us.html. [Accessed on 17 June, 2013]. Read More